EPF vs SIP vs PPF: Which can help generate highest retirement corpus on Rs 11,000 monthly investment in 30 years?

The retirement scheme is for private sector employees, where they contribute monthly to their EPF corpus. EPF provides 8.25 per cent interest rate to its subscribers. The interest is reviewed quarterly by the finance ministry on the recommendation of the labour ministry. Apart from the employee's contribution, the employer also contributes to the employee's EPF account. 

The minimum EPF contribution is Rs 1,800, while the maximum is 12 per cent of the basic salary and dearness (DA). The subscriber can invest till the age of 60, but they can withdraw the entire corpus at 58. Deposits up to Rs 1.50 lakh in a financial year provide tax benefits under Section 80C of the Income Tax Act, 1961. The interest earned and the maturity amount are tax free.

Like EPF, PPF also falls in the exempt-exempt-exempt (EEE) category, where deposits up to Rs 1.50 lakh in a financial year, interest earned, and maturity amount are tax free. The scheme provides 7.1 per cent interest rate, and the account can be opened in a post office or a bank. The minimum investment in a PPF account is Rs 500, while the maximum is Rs 1.50 lakh in a financial year. 

The scheme has a lock-in period of 15 years. A person can withdraw their corpus at that stage. But if they want to continue, they can extend the account for blocks of 5 years each with or without contribution. In either case, they will keep getting interest on their corpus.

SIP is the most popular way of investing in mutual funds. In SIP, one can invest a fixed amount every investment cycle that can be daily, weekly, monthly, quarterly, half-yearly, or yearly. Mutual funds allow SIP investment for as little as Rs 100. However, most of the funds have Rs 500 as the minimum SIP investment. Investors can increase or decrease the SIP amount. 

They can stop it and restart. They can go for a step up SIP, where their investment amount increases every year. When investors invest through SIP, they purchase net asset value (NAV) units of a mutual fund. In different investment cycles, they buy NAVs at different rates. The process is known as rupee cost averaging and, in the long run, minimises the possibility of negative returns. If one sticks to SIP investment for a long term, they can generate a sizeable corpus.

The invested amount will be Rs 39,60,000, and the estimated retirement corpus will be Rs 1,69,48,351.27.

The estimated retirement corpus will be Rs 95,63,795.

Since the investment returns are not fixed in mutual fund SIPs, we will calculate the estimated corpus at 8 per cent (debt fund), 10 per cent (hybrid fund), and 12 per cent (equity fund) annualised growth.

At 8 per cent annualised growth, estimated capital gains will be Rs 1,25,43,247, and the estimated retirement corpus will be Rs 1,65,03,247.

At 10 per cent annualised growth, estimated capital gains will be Rs 2,11,12,579 and the estimated retirement corpus will be Rs 2,50,72,579.

At 12 per cent annualised growth, estimated capital gains will be Rs 3,48,69,052, and the estimated retirement corpus will be Rs 3,88,29,052.